Topics:

Jim Rickards

Financial warfare is part of what financial strategists call asymmetrical or unrestricted warfare — which includes cyber warfare and weapons of mass destruction.

With financial warfare that means using capital markets — stocks, bonds, derivatives, commodities, foreign exchange — as weapons to try to diminish the power of your opponents and enhance your own power .

This is going on right now between Russia and the United States, and around Ukraine.

There’s no support for invading Ukraine, but they’re putting on sanctions and freezing assets.

There’s been financial warfare between the U.S. and Iran for years.

It’s in a kind of truce right now. Last December President Obama announced a kind of detente with Iran, with their nuclear negotiations and some other points.

We’re trying to get Iran and Iraq to work together to surpress what’s going on there.

The financial war with Russia is probably going to get worse because Putin isn’t finished with Ukraine.

IRAQ SITUATION AND OIL AND GOLD PRICES

It’s a very complicated chess board.

It’s not just ISIS — the Al-Qaeda off shoot — Sunni Muslim extremists who seem to be sweeping the board in northern Iraq.

Iran has now come in from the South to protect Iran’s interests. They don’t really want to but they have to.

Turkey is concerned with Kurdistan, which seems to be declaring an independent Kurdish republic.

Behind the scenes, what’s going on at a higher level is that Russia and Saudi Arabia are financing and promoting the ISIS advance.

It’s not just these terrorists, there are a lot of former Ba’athist members, Sunni members of Saddam Hussein’s former army, the so called Awakening Council, and the tribal chiefs.

These are not Muslim extremists, but they do want to topple the Shiite government.

It’s an alliance of convenience and a lot of it is being financed by Saudi Arabia at the moment.

Also, it’s designed to break up the emerging detente between the U.S. and Iran. The detente has been going on for a while, and the American people roll their eyes and say, “Wait a minute. I thought they were the enemy and they call us the ‘Great Satan’. What’s going on?”

Well, since last year, and a few years of private talks before that, Obama has been playing footsies with the Iranians. The U.S. has anointed them as the regional hegemonic power in light of their nuclear ambitions.

That’s a stab in the back to Saudi Arabia.

The Saudis and Russia are using the ISIS as pawns, along with former members of Saddam’s army. They are squaring off against Sunnis, backed by Iran, and with the U.S. trying to get on the Iranian side.

So it’s a very complicated chess board.

The bottom line for markets is that it’s complicated, it’s not going to be over soon, it’s going to get worse, and it’s going to regionalize.

That means oil prices are going a lot higher.

MARKETS

This will show up in the futures markets. There will be higher oil and higher gold prices.

What concerns Jim is that we seem to be living in a world with two second attention spans.

Market professionals in the U.S. three months ago were writing about Ukraine, and gold went up a little bit on a fear trade. There was a little bit of volatility.

There was a little push back around the sanctions, but nothing too extreme.

Then Putin backed off a little and everyone said that was great and the Ukraine issue was over.

It wasn’t over.

It’s not over.

Putin is now moving in and rolling tanks into Eastern Ukraine. There are reports that Russian journalists were killed today. That’s a reason for war. Putin has said that he doesn’t want to invade but he will go and protect Russians.

Putin is assessing that the White House can’t walk and chew gum at the same time. He’s thinking we’re distracted with Iraq so he’ll go into Ukraine.

He’s the one stirring the pot in Iraq along with the Saudis.

The bottom line for markets is this complacency on one hand and a very tumultuous world on the other.

This will break in higher prices for oil, higher prices for gold, and higher inflation.

1970s SPARK

The Fed printed easy money to promote Nixon’s reelection. We didn’t get a lot inflation at the time, but then there was a geopolitical spark with the Yom Kippur war. Inflation just ran away, with 50% inflation between 1977 and 1981.

What’s going on in the middle east and Ukraine could be that geopolitical spark on top of the dry kindling that the Fed has printed.

How can you print $4 trillion and not get inflation?

Why haven’t we seen the inflation yet?

Printing money is only half the equation.

You need a spark, a catalyst or change of behaviour to increase the velocity of money.

This could be the spark.

……………………………………………….

Please check back for the soon-to-be released exclusive 3 Minute Gold News interview with Jim Rickards by Elaine Diane Taylor.

We cover the philosophical aspects of what is happening with gold and the geopolitical situation. Included is discussion of specific advice for those who are new to investing and economics, and those who are just starting out with very little to put into investing or saving.